Kubo 1 Erin Kubo John Kubler English 114A 13 November 2013 Who to blame and how to solve the

problem: The Student Loan Debt Crisis Many assume that the only way to live a happy luxurious life is paying to get a higher education which in turn gets them a higher paying job. This way of thinking has lead to students to borrowing money no matter what expense thinking they can pay it back later when they have a better job but dont even realize they borrowed too much and end up being in debt for the rest of their lives. The officials from white house have even found that because of the high costs of college, about two-thirds of graduates take out loans with an average student debt of over $23,000 and they also state that graduates have become burdened by their debt in the article Ensuring That Student loans are Affordable Written by vice president Joseph Biden. Although many blame the students for being irresponsible and should have to take complete ownership for their debt, nevertheless even though it is true that these students should have been more careful when it comes to taking out loans there has been recent findings that show its not the students fault completely. The discovery that proves this is deceptive loan practices that have been going on between loaners and institutions so they can make more money off of students by getting them to owe more than they should. Now that people are pointing fingers there is another problem that has to be dealt with and that is how we are going to deal with a national student loan debt that has been collected to over 1 trillion dollars. In discussion of the student loan crisis, one controversial issue has been who should take the blame of this horrible situation that has been created. On the one hand, there are those people who contend that the students should take responsibility for their own actions. They borrowed more than what they could afford and since we live in an

Kubo 2 individualistic society we should be accountable for our own action. On the other hand, there are people contend that the lenders and institutions were deceitful and should take responsibility. They didnt take the time of day to talk about what loans include when borrowers sign off on them. They didnt tell their customers the details because they wanted the most profit from these innocent people. Others even maintain an argument that the government should have taken steps to stop these shady transactions sooner so they should be held responsible. However, my own view is the students, lenders, institution, and the governments are equally responsible. I have taken this view because I looked at the big picture on how this crisis came about and what I saw was that each of these groups of people had some sort of key action that caused this huge debt to manifest. The best possible solution that might solve this problem is that future college students should be more educated on student loans to become more responsible. Now for the solution, I propose that President Obamas just recently passed income based repayment plan that will ensure loans are affordable for future college students The plan is to help people currently and in the future when they take out loans because this plan will make a safer option when it comes to paying back these loans. For the issue of responsibility of this student loan crisis I believe that the students, loaners and the government all contributed to this crisis and are all equally at fault. Students are partly responsible because they blindly took out loans that they didnt truly understand what they were getting themselves into. They also should pay back what they borrowed because this is a well excepted moral that had been accepted all across the country. The lenders as well as some institutions are partly to blame as well because they used deceptive means to get money from ignorant students. The New York States attorney general even made a news report recently where they had found that banks and institutions have been working together to deceive students into getting money from them. In the article Deceptive Practices in Loan Industry, Doug Lederman

Kubo 3 stated a quote made by Andrew Cuomo (the New York State Attorney) which he said The financial arrangements between lenders and these schools are filled with the potential for conflicts of interest. In some cases they may break the law such as when Coumo put in his letter to college presidents by stating that he found that lenders from big companies would offer large payments to college institutions to drop out of the federal direct loan program so the lenders get more business which has to deal with bribing and that in turn can turn into a legal issue (Lederman). The sad thing is that the government didnt even step in to check in on the companies until way after the fact that we have accumulated over a 1 trillion dollar debt and that is why they are also partly to blame. This isnt the first time our governments officials could have taken action and decided not to. What they did instead was they sat back and watched the loan crisis unfold before their very eyes just the same as when they stood by idly while the mortgage crisis happened. In a documentary called The House of Cards it talked about the many view points of the mortgage crisis and one of them was the Federal Reserve. Former Federal Reserve Chairman Alan Greenspan was interviewed in this film and he even stated that they did have options to have prevented the mortgage crisis by saying We could have prevented it. We could have clamped down on the American economy. Generated a %10 unemployment rate and I can guarantee you that we wouldnt have had a housing boom which proves that high government officials had a choice to clamp down on some of these companies, but what they did instead was just let the problem grow because the senate was blind to think the economy was healthily growing when in truth there were ticking time bombs throughout the world that would soon blow in everyones faces (House of Cards). Some officials in congress were blind to the fact that there were some shady dealings in the housing market but the majority had some sort of intuition that there was something wrong. All they saw was that money was being pumped back into the economy and in

Kubo 4 turn the economy was doing very well. They did the same action again by standing by and watched the student loan crisis grow to a monstrous amount because government officials dealing with student loans just let companies continue their deceit by just letting them make their own decision on how much people should pay back their loans and not telling people the complete truth by doing shady dealings and underhanded schemes that keep borrowers from seeing the true amount they are going to be paying in the future. I say this because what all these officials did was think that the borrowers are responsible for paying back their loans with no sympathy and without any incentive to look into how they got their in the first place. Even though discovering the problem that caused the student loan crisis and who should take responsibility is important, nevertheless at this point in time we should direct our energy and attention to finding a solution to this problem. There have been quite a few solutions that have been presented and the one that I see as working the best for everyone is the recent income-based repayment plan that President Obama just passed. In the article Ensuring the Student Loans are Affordable by Joseph Biden, the goal that president set out to do was President Obama set a national goal: by 2020, America will once again have the highest proportion of college graduates in the world, but before he can make this happen he passes this new payment plan that gives more safer affordable options to continue school(Biden). This plan will ensure that borrowers will pay no more than 10 percent of their income above a basic living allowance. This plan looks at peoples individual lifestyle and makes them pay a minimum payment depending on how each person is doing financially. For borrowers who take responsibility for their loans and make their monthly payments will be forgiven after 20 years of payments and also for public service workers -- such as teachers, nurses, and those in military service -- they will be forgiven after 10 years for any remaining debt. This will take a lot of pressure off of those who thought they could never pay off their loans.

Kubo 5 Yet some readers may challenge this idea by bringing up the point that there is another program that is being tested in Oregon that tries to bring an idea where you dont take out loans for college. Martha C. White talks about this plan in her article Oregons Pay It Forward Program: Imagine College with No Tuition, No Loans, No Debt by summing it up by stating that students can go to state colleges tuition free by stating that Instead of taking out loans and piling up debt, students agree to pay the state back a small portion of their income over the course of a couple decades which would help get rid of the problem of student loans altogether (White). I agree that this plan is very similar, but there are many problems to this plan because it isnt a complete idea. In the article Guest Post by Alex Holt: The Downsides of Oregons Pay It Forward Plan, Reihah Salam points out many flaws to this plan. For instance, Salam states that high income graduates must pay more to offset the low payments from graduates earning little income few people realize that also means high income graduates would probably have to pay more than they would under existing student loan options(Salam). This is because the state is making participants pay a set percent of their income without taking into consideration on how much they will be making with their degrees which causes imbalance payments. This is a good reason why the income based repayment plan produced by the white house is the safest option for everyone. For the borrowers they have a safety net for if they cant pay back the loan completely they are given the option to pay with a percentage of their income and be forgiven by a certain time and a number of payments. They are responsible for what they should be paying for their education instead paying more for others mistakes like the Oregon plan to take more money from higher income graduates. For lenders they dont have to worry about the risk of these people defaulting on their loans because the government is going to take responsible for the amount of money for those who cant pay back their loans completely. For the government officials they are finally pushing a way to bust this economy by producing more people with

Kubo 6 college degrees to make a difference in society. For good measure to prevent this from happening again we should start educating what to expect with student loans in high school where they are preparing to go to college. With this knowledge new students will be more responsible and educated so they dont become victims of lenders schemes in society. Overall we have spent too much time putting the blame on other when we are all at fault for this incident and since we are stuck with this problem we should go with a solution that works for everybody. Despite the horrible decisions and deceitful actions that students, lenders, institutions, and the government had made we are left with a huge debt that needs to be taken care of. I believe that with Obama-Biden administrations proposal is what we need so that we can achieve a solution that can benefit the majority of people which include borrowers, lenders, and government official by busting up the economy. This plan and combined with educating the next generation of college students will prove to be most benefitting when it comes to paying for college because now there is less stress to worry about when it comes to paying back loans. We should all work together and settle on a plan to help solve this student loan crisis so there is more time thinking about what people want to accomplish in live instead of paying back loans for the rest of their lives.

Kubo 7 Works Cited Biden, Joseph. Ensuring the Student Loans are Affordable. Whitehouse.gov. The United States Government. n.d. Web. 12 Nov. 2013 House of Cards. Video.CNBC.com. CNBC LLC, NBC Universal, 4 Jun. 2009. Web. 12 Nov. 2013. Lederman, Doug. Deceptive Practices in Loan Industry. InsideHigherEd.com. Inside Higher Ed., 16 Mar. 2007. Web. 12 Nov. 2013. Salam, Reihan. " Guest Post by Alex Holt: The Downsides of Oregons Pay It Forward Plan." n.d. 26 July 2013. Web. 12 Nov. 2013. White, Martha C. Oregons Pay It Forward Program: Imagine College with No Tuition, No Loans, No Debt. Business.Time.com. Time Inc., 17 Jul. 2013. Web. 12 Nov. 2013.